Services Of Business Promotion/Support And Marketing Service Do Not Qualify As Intermediary Service: CESTAT

The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the services of business promotion, support, and marketing do not qualify as intermediary services.

The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the place of provision of business promotion service shall be the location of the recipient of service, which is outside India, and such services shall qualify as exports of service and hence not subject to service tax.

The appellant/assessee is in the business of providing software and hardware platforms and instruments that deliver end-to-end visibility across physical, virtual, and hybrid networks.

The appellant entered into an agreement with JDS Uniphase Corporation, a Delaware, United States Corporation (JDSU USA), and as per the terms of the agreement, the appellant was engaged in the promotion and marketing of JDSU USA products by directly liaising with customers and providing demonstrations of JDSU USA's products as and when required.

For the provision of such promotional and marketing activities for JDSU USA's products, the appellant received a consideration in the form of a commission from JDSU USA.

The appellant did not charge service tax on the invoices since the appellant was under the bona fide belief that, in terms of the Finance Act, 1994, read with the Service Tax Rules, 1994, and Rule 3 of the Place of Provision of Services Rules, 2012 (POPS Rules), the services provided by the appellant to JDSU USA qualified as an export of service.

The appellant erroneously deposited a service tax of Rs. 3,03,80,274 on the invoices under the category of 'Business Auxiliary Service'. On account of the erroneous discharge of service tax on the export invoices, the appellant filed an application for a refund of the service tax discharged.

The Commissioner (Appeals) held that the services provided by the appellant qualified as intermediaries and dismissed the appeal of the appellant.

The department contended that the refund claim is not maintainable in the absence of any challenge to assessment or self-assessment in appeal. The refund claim filed by the appellant was not maintainable.

The assessee contended that a refund of service tax is maintainable even in the absence of any challenge to assessment or self-assessment in an appeal.

The issue raised was whether the services provided by the appellant to JDSU USA qualified as an export of service and, hence, were not subject to service tax.

The tribunal has held that the authorities below have wrongly observed that the appellant is providing technical services, whereas, in fact, the appellant has provided promotional and marketing services and not provided technical services, viz., repair service, erection commissioning, and installation service, to JDSU USA. The observation in the order is factually erroneous.

Counsel For Appellant: Gajendra Maheshwari

Counsel For Respondent: Siddharth Jaiswal

Case Title: M/s Viavi Solutions India Pvt.Ltd. Versus The Commissioner of CGST, Gurgaon-I

Case No.: Service Tax Appeal No. 60064 Of 2020

Click Here To Read The Order